We have fallen into debt trap: NBR chairman

Policymakers and experts have expressed concern over the country’s debt and they fear that Bangladesh could fall into a debt trap.

Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said that if necessary reforms and fiscal discipline are not ensured to increase revenue collection, Bangladesh could face a serious debt trap.

Meanwhile, National Board of Revenue Chairman Md Abdur Rahman Khan commented more explicitly: “We have already fallen into a debt trap; without acknowledging this truth, it is not possible to move forward.”

They made these remarks on Monday at a seminar held at the National Economic Council (NEC) conference hall in Sher-e-Bangla Nagar, Dhaka.

The seminar was organised by the General Economics Division (GED) of the Bangladesh Planning Commission on the occasion of the release and presentation of Bangladesh State of the Economy 2025 and the Sustainable Development Goals (SDG) Progress Report 2025.

Anisuzzaman Chowdhury, Special Assistant on Finance to the Chief Adviser, was the chief guest while the special guest was Ahsan H Mansur, Governor of Bangladesh Bank.

Shafiqul Alam, Press Secretary to the Chief Adviser, Lamia Morshed, Chief Coordinator on SDG matters at the Chief Adviser’s Office, Md Khairuzzaman Majumdar, Secretary of the Finance Division and SM Shakil Akhtar, Secretary of the Planning Division, were also present.

The seminar featured speakers including Zahid Hussain, former lead economist of the World Bank Dhaka Office, and Mahbub Ullah, former professor at Dhaka University. The welcome address was delivered by Manzur Hossain, Member of the GED, and the keynote paper was presented by Monira Begum, Additional Secretary of GED.

At the event, Mustafizur Rahman, distinguished fellow of CPD, said that falling into a debt trap would not be good for the country. He explained that borrowing would then be required to repay existing loans.

Already, in the revenue budget, the largest expenditure was on salaries and pensions of government employees, followed by agriculture and education. However, now the payment of interest on loans has taken precedence, pushing sectors like agriculture and education to the background.

NBR Chairman Md Abdur Rahman Khan said that a few years ago, the tax-to-GDP ratio was above 10 per cent, but now it hovers around 7 per cent. He emphasised that the root causes of the problem need to be clearly identified. One major reason for the decline in the tax-to-GDP ratio is that revenue cannot be collected from all sectors of GDP.

Meanwhile, Abdur Rahman Khan also mentioned that during the interim government, the NBR would be divided into two parts and operate under the leadership of two secretaries.

The Governor of Bangladesh Bank stated that the merger process of the five troubled banks is progressing rapidly. The deposit guarantee has been increased from Tk 100,000 to Tk 200,000. Distribution of funds to depositors could begin within a week or two.

According to the Governor, as a result of this initiative, 7.6 million families, including customers of the five banks, will be able to recover their deposits. He also expressed hope that the new bank could become profitable in its first or second year.